The Advantages of Asset Finance

Often businesses need to purchase equipment to improve productivity, adopt new technology for competitive advantage or simply replace obsolete kit. However, new equipment can be expensive, so companies need to find a cost effective approach to secure funding, without negatively impacting their cash flow.

Flexible and affordable option

For many small and medium sized businesses, asset finance is a simple and affordable option to fund essential equipment to both strengthen and grow the organisation. This can cover a wide range of requirements including both hard assets, such as vehicles, machinery and equipment, or soft assets, for example, computing software, furniture and lighting.

The two most popular methods are:

• Hire purchase – allows businesses to spread the cost by paying for the asset in fixed monthly instalments over an agreed time period. Using this method, businesses hire the item during the agreement, with the option to buy at the end of the term for a small fee.

• Leasing – enables items to be leased for the majority of their estimated lifetime. The finance lender buys the asset on behalf of the business, who would then pay a number of instalments for the use of the asset.

In some cases existing assets can also be refinanced, by allowing businesses to release an agreed percentage of the item’s value. The exact amount will depend upon the type of equipment to be refinanced, its age and the total equity available. This can be an attractive option for businesses who need to quickly fund a temporary shortfall in income.

Business benefits

The team at Ideal4Finance have identified five key benefits of choosing asset finance for your business.

• Fixed repayments - payments are agreed and fixed for the life of the contract, to provide an affordable funding scheme for your business. This option provides stability and greater control over your financial management, with a fixed monthly sum. In addition, funds are not repayable on demand, unlike a bank overdraft.

• No large outlay - no requirement to pay the full cost of the purchase upfront as finance is secured on the asset. The majority of the outlay is spread over a number of years, usually a 3-5 year period.

• Protect your cash flow – safeguard your working capital by paying a monthly amount, as opposed to taking a large cash lump sum out of your business. Plus, you can also boost your cashflow by providing an injection of capital into your business.

• Minimal risk – asset finance is unsecured, so if you miss a few payments the lender cannot take other capital, such as your home, to pay the debt. This is a key advantage over a bank loan, where you may be required to place your property as security for a similar amount.

• Quick access to essential equipment – the simple and swift process means securing the equipment and tools to grow your business can be acquired easily, with minimum disruption to your business. This is also an attractive option for those needing to continually refresh their equipment with the latest technology.

Our team of experts at Ideal4Finance will work with you to secure a competitively priced repayment plan, tailored to your business needs. Contact us today on 01772 283371 or email us on mrobinson@ideal4finance.com to discuss the range of asset finance options to help your business grow.